Being a smart saver and investor pays dividends

Whether you are 25 or 65 being a smart saver and investor is very important. No one can afford to make wrong choices or miss opportunities that could maximize their earnings. Even when working with a professional, remembering a few important tips can be beneficial.

How do people make mistakes with their savings accounts?
A common mistake that people make with their savings, especially their emergency fund, is to not look for the best return possible. They often leave it in a very low paying basic savings account instead of using higher yielding money market or even certificates to boost their return.

Do people need to keep all of their emergency savings in a liquid account?
You only need to keep about 90 days of expenses in a very accessible account. With the remaining funds look to earn a better return and perhaps even utilize investments. Most of the time you won’t need all of your emergency savings at one time.

What is the biggest mistake people of any age often make with their investments?
Not having the appropriate level of risk within their investments. Younger investors can take more risk, if they are too conservative they lose the opportunity to have higher returns. As someone matures their risk tolerance should decrease because they don’t have the time to make up any possible losses.

How should people handle turbulent markets?
The very first step is to remain calm and not start following the market on a daily basis. If your portfolio is adequately diversified market downturns won’t have a huge impact on your return. The mistake that people make is to try to time the market by getting in and out, which never works out for most people.

What is a common strategy that people don’t utilize with their investments?
Rebalancing. People who have diversified portfolios need to rebalance their holdings annually. It is very likely that investments will grow at different rates. If they never rebalance, they might not be as diversified as they hoped, which can impact their risk level or their future growth.

Is there any advice that applies to all generations of investors?
There are two very important concepts to remember. If it sounds too good to be true, it probably isn’t true and never invest in anything that you don’t understand. Knowledgeable investing is responsible investing - always do your research before making any investment.